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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Orion Scaffolding Ltd v Revenue & Customs [2007] UKVAT V20502 (07 December 2007) URL: http://www.bailii.org/uk/cases/UKVAT/2007/V20502.html Cite as: [2007] UKVAT V20502

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20502

DEFAULT SURCHARGE – was surcharge liability notice received by Appellant –– yes - did Appellant have reasonable excuse for defaults – no – ss 59(4) and 59(7) Value Added Tax Act 1994

LONDON TRIBUNAL CENTRE

ORION SCAFFOLDING LIMITED Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: Nicholas Aleksander (Chairman)

Praful Davda

Sitting in public in London on 21 November 2007

The Appellant did not appear and was not represented

Simon Chambers, advocate, of the Solicitor's Office of HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2007


 


DECISION

1. This is an appeal against a default surcharge in respect of the late payment of VAT. Mr Simon Chambers represented Customs. The Appellant did not appear at the hearing and was not represented. At the time the hearing was due to commence, the clerk to the Tribunal telephoned Spofforths LLP (the Appellant's representatives) to ascertain why neither they nor the Appellant were at the hearing. The clerk was told that they believed (for reasons which are not entirely clear to us) that attendance at the hearing was voluntary. This statement was subsequently confirmed in a fax to the Tribunal from Spofforths. Accordingly the tribunal determined to proceed under rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended).
2. A bundle of documents was produced by Customs as evidence.

The Background Facts

3. The Appellant was registered for VAT purposes with effect from 22 August 2003 with a registered address at Sunnyside, New Road, Upper Beeding, BN44 3TL.
4. VAT returns for the periods ended January 2006, July 2006, January 2007 and April 2007 were sent in the post by Customs to this address. These returns were signed on behalf of the Appellant and were posted back to Customs and the VAT shown on the return was paid, but the returns and payments were received after their respective due dates. In the case of the January 2006 return, payment was received by Customs on 8 March 2006 and the return was received on 7 March 2006. In the case of the July 2006 return, payment was received by Customs on 11 September 2006 and the return was received on 4 September 2006. In the case of the January 2007 return, payment was received by Customs on 8 March 2007 and the return was received on 5 March 2007. In the case of the April 2007 return, payment was received by Customs on 11 June 2007 and the return was received on 1 June 2007.
5. A surcharge liability notice was sent in the post by Customs to the Appellant at its registered address on 17 March 2006 (in respect of the January 2006 return). It stated that the Appellant was in default for the period 1 November 2005 to 31 January 2006 and that the Appellant would be liable to a surcharge if it was in default in respect of the surcharge period which ran from the date of the notice until 31 January 2007. A surcharge liability notice extension was sent in the post by Customs to the Appellant at its registered address on 15 September 2006 (in respect of the July 2006 return). It extended the surcharge period until 31 July 2007. Neither the surcharge liability notice nor the surcharge liability notice extension were returned to Customs by the Post Office as undeliverable.
6. A default surcharge was levied by Customs in respect of the July 2006 return and payment, and in respect of the January 2007 return and payment.
7. A letter from Customs' debt management unit dated 8 May 2007 was posted to the Appellant at the registered address but was returned to Customs by the Post Office as undeliverable, marked "addressee has gone away". Demand notices dated 5 June 2007 and 27 June 2007 were posted to the Appellant at the registered address but were also returned to Customs by the Post Office marked "addressee has gone away".
8. We note that the returns for the periods in default must have been received by the Appellant, as they were all returned to Customs (albeit late) signed on behalf of the Appellant. The January 2006 and the July 2006 returns were sent to the Appellant shortly before the issue of the original surcharge liability notice and the surcharge liability notice extension respectively. We note also that the January 2007 and the April 2007 returns must have been received by the Appellant for the same reasons, and that these would have been received by the Appellant after the dates of the surcharge liability notice and the surcharge liability notice extension.. We also note that neither of these two notices had been returned by the Post Office as undeliverable for any reason. It was only after May 2007 that post was returned as being undeliverable. We therefore find, on the basis of the evidence before us, that both the surcharge liability notice and the surcharge liability notice extension had been received by the Appellant.
9. On 22 June 2007 the Appellant called Customs' telephone helpline and informed Customs of its new address at 196 Downside, Shoreham-by-Sea, West Sussex. The Appellant was told that the change of address needed to be confirmed in writing and was given the address of the Variations Unit to which the change should be notified.

The Appellant's Case

10. The Appellant's arguments are set out in a letter dated 23 July 2007 from Spofforths LLP (the Appellant's accountants and representatives) to Customs' Reconsiderations Team as follows:

Post from Customs to the Appellant had been returned undelivered as the Appellant's address had recently changed

Following the cases of Commissioners v Medway Draughting & Technical Services and Commissioners v Adplates Offset Ltd, no default surcharge can be levied where the surcharge liability notice had not been received by the taxpayer

The Appellant had now taken action to ensure that payments would be received on time

There was no loss of revenue and the errors made by the taxpayer were a genuine oversight

The Appellant had taken all reasonable steps to ensure post was received by him, including a postal re-direct service

The Appellant had formally notified Customs separately of its current trading address

11. The judgement of the High Court in the Medway and the Adplates cases ([1989] STC 346) places particular emphasis on the receipt by the Appellant of a surcharge liability notice before default surcharges can be levied. We have found on the evidence before us that both the surcharge liability notice dated 17 March 2006 and the surcharge liability notice extension dated 15 September had been received by the Appellant. The original notice provided for a surcharge period up to 31 January 2007 which was extended by the subsequent notice to 31 July 2007. The default surcharges which are the subject of this appeal all arise in respect of returns and payments with due dates within these periods. We therefore consider that (unless the Appellant can show it had a reasonable excuse for the default), the default surcharges were properly levied by Customs.
12. We do not consider that the fact that the Appellant has taken action to ensure that payments will be received on time in the future provides a reasonable excuse for defaults that have occurred previous to that action. Nor is it a reasonable excuse that there was no loss of revenue or that the errors made were a genuine oversight.
13. We note that the Appellant had arranged for post to be redirected to him. But on the evidence before us, we do not consider that there had been any failure on the part of the Post Office to forward correspondence or documents from Customs to the Appellant that is material to this appeal.
14. We also note that the Appellant had only notified Customs of its change of address on 22 June 2007 when the Appellant called the Customs' telephone helpline, which was after the dates of all of the defaults that are the subject of this appeal.

Decison

15. Our decision on the issue for determination in the appeal is that the surcharge liability notice and the surcharge liability notice extension had been received by the Appellant, and that accordingly the Appellant was liable to a default surcharge in respect of its failure to pay VAT and file its VAT return by the due date in respect of the periods that are the subject of this appeal. Further we consider that the Appellant did not have any reasonable excuse for its defaults. This means that the appeal is dismissed.
16. We draw the attention of the Appellant to rule 26(3) of the Value Added Tax Tribunal Rules 1986, under which the Appellant may apply to the Tribunal within 14 days after the date on which this decision is released. to have it set aside on such terms as the Tribunal thinks just.

Nicholas Aleksander

CHAIRMAN

RELEASE DATE: 7 December 2007

LON//2007/1265